Power auction goes smoothly for 2020-2021

Power auction goes smoothly for 2020-2021

Closings of Brayton Point, Pilgrim causing no disruptions

NEW ENGLAND POWER GRID OFFICIALS said on Thursday that they easily secured enough electricity to meet the region’s energy needs three years from now.

ISO-New England, the region’s power grid operator, said an auction on Monday secured commitments from generators to deliver 35,835 megawatts of electricity between June 1, 2020, and May 30, 2021. The commitments will cost electric ratepayers across the region $2.4 billion, which is about $600 million less than last year’s auction and the lowest price since 2013.

The so-called forward capacity auction sets the price generators receive for having their plants ready to produce power when needed three years from now. The generators will also collect a wholesale price for the energy they actually deliver.

Robert Ethier, vice president of market operations at the ISO, said the grid operator estimated it needed 34,075 megawatts of electricity to meet demand across the six-state region from June 2020 through the end of May 2021. An additional 1,760 megawatts was secured to provide a cushion.

Approximately 88 percent of the generating capacity came from existing or new power generation, 9 percent from reductions in electricity demand, and 3 percent from imports from New York and Canada. New power generation represented 264 megawatts, or less than 1 percent of the total capacity, and came from increased generating capability at existing plants, Ethier said.

Last year’s auction, for the year ending May 30, 2020, yielded 1,459 megawatts of new power generation, including three new plants in Rhode Island, Connecticut, and Massachusetts that will operate using natural gas or oil.

Although the closings of the Brayton Point power plant in Somerset this year and the Pilgrim Nuclear Power Station in Plymouth in 2019 have raised concerns about whether the region, and particularly southeastern Massachusetts, has adequate generating capacity, the forward-capacity auction suggests the market has filled the hole left by those plant retirements fairly easily.

“All of those retirements have already been replaced in the market,” said Dan Dolan, president of the New England Power Generators Association.

Most of the plants coming on line to fill the gap left by retiring facilities run on natural gas, which raises reliability concerns in the winter when supplies of gas coming into the region sometimes become constrained. ISO officials are pushing for more pipeline capacity into the region, but so far no mechanism to pay for that added capacity has been found.

Overall, Dolan said, the power generation market in New England is working well, delivering electricity reliably and at reasonable prices. He said the wholesale price of electricity in 2016 was the lowest in the history of the competitive marketplace.

“These competitive market benefits can continue but must not be taken for granted as states move to carve out and subsidize individual technologies and resources, which would undermine the investments being made today,” Dolan said.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Dolan was referring to the Baker administration’s plan to bypass the competitive marketplace and directly seek bids for new hydroelectricity supplies from Quebec in April and offshore wind suppliers in June. As this week’s auction showed, neither the hydroelectric or offshore wind projects will come on line by the end of May 2021, which means they will play no role in helping the state reaching its carbon emissions targets for 2020. (CLARIFICATION: The projects did not seek forward capacity payments for 2020-2021, but that does not mean they won’t be online by then. Northern Pass, a project to bring hydroelectricity from Quebec, is scheduled to come online in 2019.)

ISO officials said 137 megawatts of wind and 66 megawatts of solar were included in this week’s forward capacity auction. Another 720 megawatts of solar is produced behind customer meters, meaning it doesn’t participate in the forward capacity auction but does help to reduce overall power demand.

  • Mhmjjj2012

    Now that I’ve seen how the state legislature labeled their pay raise bill as an “emergency” to fast track it through both houses that makes me wonder why restructuring the state’s electricity utility industry was handled as an “emergency” back in 1997. Is that the reason why 1% of our electricity represents 8% of the costs? And exactly how did ISO-New England end up with a $2,000,000 CEO? It seems to me most of the states with high electricity costs are the ones that restructured their electricity industry.

  • NortheasternEE

    State and regional mandates for renewable energy, that bypass the market, is sending a signal to baseload power from coal and nuclear to retire early, and to natural gas to fill the gap. Currently, ISO-NE has about 31,000 megawatts to handle about 28,000 megawatts of peak demand. Energy efficiency programs are decreasing demand. So, why is ISO-NE projecting a need for 34,000 megawatts in 2020? The answer is that the renewable energy mandated by the state and region has no capacity value and must be backed up with expensive natural gas forced to run inefficiently and intermittently, something that coal and nuclear cannot do safely and economically.

    State and regional plans to transition to a clean energy future is destroying the competitive markets for electricity. The closure of clean nuclear power means there is no carbon avoidance, Rates are going through the roof. And, winter power outages from natural gas shortages are inevitable.

    Tell Beacon Hill to stop interfering with the market. They do not know what they are doing,

  • Joan Bird

    Seeing the electric pylons reaching so high into the dusky blue sky, one can see a certain beauty 1200 of them would bring to New Hampshire. CT and MA would get the power, NH would get the towers. Why can’t
    people understand what a fair exchange this is … ?